At least £650m worth of valuable materials are being thrown into landfill or burned in the UK each year, despite rising costs of natural resources, campaigners and industry warned on Monday.

A coalition of business groups and environmentalists said products ranging from steel, wheat and rubber to rare earth metals necessary for making goods such as mobile phones will become increasingly costly, threatening UK productivity.

The coalition, which includes the manufacturers' organisation EEF and Friends of the Earth, is demanding the government develop an urgent action plan to preserve valuable resources, including policies to improve recycling and a ban on reusable materials going into landfill.

It comes after a survey by EEF found that four-fifths (80%) of senior manufacturing executives thought limited access to raw materials was already a business risk and a threat to growth, and for one in three companies it was considered the top risk. Last year, the EU's commissioner for the environment told the Guardian that the waste of valuable natural resources threatens to result in a fresh economic crisis.

The groups warned the cost of raw materials had surged in recent years, with increases in prices expected to escalate as three billion people join the middle classes across the world, demanding more consumer goods and putting huge pressure on already-overstretched natural resources.

But hundreds of millions of pounds worth of reusable materials were being buried in landfill or burned in power plants that generate energy from waste, they said.

The groups urged the government to ensure that resources are used more efficiently, a move which would create thousands of new jobs, boost the economy and protect the environment.

Ministers should create a new "office of resource management" to co-ordinate Whitehall action on tackling the resource crisis, set up a task-force to review targets and recommend policies to boost recycling and ban recyclable materials from landfill and energy from waste plants.

EEF's head of climate and environment policy Gareth Stace said: "We live in an age where demand for resources is surging with prices increasing and concerns about shortages mounting.

"While the current action plan was a step in the right direction, it currently falls short of meeting the challenges we will face where obtaining new resources will become more difficult and costly.

"Government must now step up its ambitions and produce a wider plan of action that deals with the challenges not just now but in the longer term.

"This is vital not just from an environmental perspective but to ensure the long term sustainable future for manufacturing and the wider economy."

Friends of the Earth resource campaigner Julian Kirby warned ministers must take action to "prevent a growing resource risk becoming a catastrophe for our economy and the environment".

He said: "The UK buries and burns at least £650m a year of valuable materials, wasting billions of pounds of business and public money.

A spokeswoman for the Department for Environment, Food and Rural Affairs said: "The resource security action plan we published this year sets our plans – including a new circular economy task force led by the Green Alliance to encourage better ways of keeping materials in supply chains, a competition to come up with new methods of re-using or recycling precious materials, and further work by Wrap (Waste and Resource Action Programme) to better understand the flow of critical materials in the economy.

"We are working with businesses to strengthen our approach to protecting our economy against materials supply risks, and welcome the EEF's contribution."